Fundstrat
Fundstrat's Tom Lee: Is Bitcoin Headed to $200K After Fed Cuts?
9/8/2025, 12:04:07 PM
Economic Summary
- The bond market is pricing roughly three Fed cuts by year-end (vs Fed's two), signaling the market sees the labor market as deviating more from the Fed's target than inflation.
- Labor market weakness is concerning because once momentum to weaken begins it's hard to reverse, which could prompt the Fed to act quickly to avoid a deeper downturn.
- Long-end yields (10-year and 30-year) are being driven more by global growth expectations; the Fed's influence wanes beyond the 5-year point, making long rates a risk to policy transmission.
- The spread between 30-year mortgage rates and the 10-year Treasury is over 300 basis points (50-year average ~160); if cuts resume, the 30-year mortgage could fall ~150 basis points, materially easing housing conditions.
- ISM has been below 50 for 31 months—the longest stretch on record—so rate cuts that revive business confidence could help broaden a cyclical recovery; risk assets and small caps could benefit.
Bullish
- Fed cuts could sharply lower mortgage rates, stimulating housing demand.
- Easing could restore business confidence and broaden the equity rally, helping small caps.
- Bitcoin and Ethereum likely to rally in Q4 if rate cuts resume; BTC target raised.
Bearish
- Weakening labor market could be hard to reverse and presage an economic slowdown or recession.
- Rising long-term yields (10y+) may offset Fed easing, limiting monetary policy effectiveness.
- High 30-year mortgage rates are strangling housing and could keep the sector weak despite cuts.
Bullish tickers
BTCETHIWM
BTC
1 price targets
200000
Bullish
Could double to $200,000 by year-end if Fed cuts resume and risk assets rally.
Bearish
Highly sensitive to monetary policy; vulnerable if the Fed stays on pause or long-term yields rise.
ETH
Bullish
Likely to benefit from a small-cap/equity rally and easing monetary policy.
Bearish
Correlated to equities and vulnerable to policy tightening or a risk-off shift.
IWM
Bullish
Should rally with rate cuts, improving business confidence, and a broader risk-on move.
Bearish
Would be pressured by rising long-term yields or a recession despite potential Fed cuts.
People mentioned
Tom LeeScott BesantAndrew